FEBRUARY HOME

Home sales dropped less then 2 percent in February, the Arkansas Realtors Association said Monday.

There were 1,576 homes sold in the 43-county area surveyed by the Realtors Association, down 1.6 percent from 1,601 in February last year. The state’s largest counties are included among the 43 counties reporting to the Realtors Association. February is typically the second-slowest month for home sales each year, better only than January, said Michael Pakko, chief economist at the Institute for Economic Advancement at the University of Arkansas at Little Rock.

Central Arkansas and Northwest Arkansas performed well in sales and home prices, Pakko said. Those two areas also are experiencing the best economic growth in Arkansas, Pakko said.

“Northwest Arkansas seems to be bouncing back pretty strongly [in the housing market], particularly Washington County home sales,” Pakko said.

January sales were up more than 11 percent. Home sales in January and February combined were up about 3.5 percent, Pakko said.

“That is a good indicator of what the trend is now,” Pakko said. “But what we have so far is not enough to give us an idea of how things will look for the year as a whole.”

Nationally, home sales are increasing and new home construction and builder confidence are improving, said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas in Fayetteville.

Some economic factors favor home sales, such as low mortgage rates.

Mortgage buyer Freddie Mac, the Federal Home Loan Mortgage Corp., said last week that the average rate for the 30-year fixed loan rose to 3.57 percent from 3.54 percent the previous week. That’s near the 3.31 percent reached in November, which was the lowest on records dating to 1971. The average rate on the 15-year fixed mortgage is below 3 percent.

Other factors are not as clear, Deck said.

“Many [young people] have a lot of student debt and may not be willing to take on mortgage debt,” Deck said. “Even if they can, their credit rating is not good enough. Broadly put, we see consumers right now a little debt averse.”

The housing market and employment market are intimately related, Deck said.

“And given how we’ve seen the employment market perform here in Arkansas over the last few months, it’s not surprising that the housing market isn’t taking off,” Deck said. “We would need to see really strong job growth to expect to see the influx of people that would lead to a housing sales boom.”

Pakko projects that home sales for the year in Arkansas will be up about 6 percent.

“That’s nothing earthshattering, but it’s an improvement over 0 percent last year,” Pakko said.

Home prices were up 7.6 percent in the state in February compared with February last year, the Realtors Association said. That is consistent with federal data on home prices in the state, Pakko said.

“Home prices are no longer falling as they were for so long,” Pakko said.